Powerchip predicts memory chip prices to rise in April
Wednesday, February 27, 2008
By Chinmei Sung, Bloomberg
Powerchip Semiconductor Corp., Taiwan's biggest maker of computer-memory chips, predicted prices will rise in about a month after chipmakers scaled back production, easing an industry glut.
Prices of the benchmark 1 gigabit computer memory chip may climb to US$3.5 by as early as July, from about US$2 now, President Brian Shieh said in an interview in Taipei yesterday. Prices will "hover" above US$2 for the next month as customers sell excess inventory, he said.
"If the price rises to that level, it will help the sector's profitability greatly," said Jacky Lu, who helps manage US$200 million in funds at Allianz Global Investors Taiwan Ltd. in Taipei. Lu has a "cautious" view on DRAM stocks.
Elpida Memory Inc., Japan's largest computer memory chipmaker, and Taiwan's Nanya Technology Corp. posted record losses last quarter as overproduction drove down prices, forcing chipmakers to scale back expansion plans. That's going to help production of the chips rise at a lower pace than demand this year, Shieh said.
Global demand for dynamic random access memory, or DRAM, chips will rise 55 percent to 60 percent this year, while supply will climb by 45 percent to 55 percent, Shieh said.
Hynix Semiconductor Inc., the world's second-largest memory chipmaker, said earlier this month it expected DRAM prices to stabilize this year on slower supply growth. The company predicted at the time that the DRAM price decline would be limited after the Lunar New year.
Prices of the benchmark type of dynamic random access memory, which temporarily store data to speed up computers, tumbled to a record low of US$1.87 on Dec. 21, according to Dramexchange Technology Inc., operator of Asia's biggest spot market for chips. The 1 gigabit chip last traded at US$2 after climbing to as high as US$2.24 on Jan. 23.
"It's very unlikely the price will fall below US$2," Shieh said.
Chipmakers spent less adding production capacity after prices of DRAM chips fell about 50 percent in 2007, UBS AG said in a report dated Jan. 30.
Separately, Powerchip's capital spending for next year will rise to about NT$40 billion, from this year's NT$35.1 billion, because it plans to build a 12-inch factory in Hsinchu to make NAND flash chips, Shieh said.
[Edit: I wonder how they make these decisions? In any case, as far as nand consumer is concerned, more the merrier! I may be wrong but I think there is a lot of excesses in the memory markets right now and the memory industry is definitely ripe for some restructuring. Either participants have to cut production else continue with their transfer of wealth policy as Eli put it very nicely. Any price rise in DRAM is not likely to stick for too long in my opinion, FWIW!] |
